-12-
settlement allocation was not the result of quid pro quo
negotiations, but the product of unfettered, unilateral
draftsmanship by petitioner, who formulated the provision solely
for tax considerations.
Furthermore, the allocation of the disputed settlement
amount does not satisfy the exclusion provided in the final
sentence of section 104(a) concerning reimbursement of expenses
for emotional distress-related medical treatment. While the
allocation of the disputed settlement amount identifies “out-of-
pocket” expenses as a general, catchall compensatory item, in
addition to the payments specified as “pursuant to section
104(a)(2)”, the record contains no evidence reflecting any
medical expenses petitioner may have incurred.
The bona fide nature of petitioner’s averred symptoms was
substantiated by the testimony of Arabella Teal (Teal), a former
official in the District’s Office of the Corporation Counsel and
the District’s principal representative in the settlement. In
stating that she could not recall requesting, receiving, or
reviewing any medical documentation corroborating petitioner’s
illness, Teal remarked that the settlement discussions did
include petitioner’s “emotional and physical reaction to what had
happened, because that’s one of the things that [the District]
had to evaluate in terms of deciding whether to settle the case.”
(Emphasis added.) Teal stated that although she may have
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